During each monthly meeting of our AML/CFT Membership Group, we make time for “Quick Response, Independent Audit & Examination Findings & Feedback”. This gives us a chance to share with you what we’re seeing on our end through client questions and AML/CFT audits, but members also get a chance to share with the group what they are seeing on their end from examiners and other feedback/experiences they may have.
In one of our meetings, we discussed the CIP requirements and how they apply to loan participations which all came about from questions asked through our Quick Response Consultation Service.
Emily discusses this in the video.
She also references the following:
The FFIEC’s BSA/AML Examination Manual states:
The bank’s CIP may include procedures specifying when a bank will rely on the performance by another financial institution (including an affiliate) of any procedures of the bank’s CIP with respect to any customer of the bank that is opening, or has opened, an account or has established a similar formal banking or business relationship with the other financial institution to provide or engage in services, dealings, or other financial transactions, provided that:
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Such reliance is reasonable under the circumstances;
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The other, relied-upon financial institution is subject to a rule implementing 31 USC 5318(h) and is regulated by a federal functional regulator; and,
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The other financial institution enters into a contract requiring it to certify annually to the bank that it has implemented its AML program, and that it will perform (or its agent will perform) the specified requirements of the bank’s CIP.
The CIP FAQs state:
- Are loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker within the exclusion from the definition of “account” for loans acquired through an acquisition, merger, purchase of assets, or assumption of liabilities?
Yes, this exclusion is intended to cover loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker. If, however, the bank is extending credit to the borrower using a car dealer or mortgage broker as its agent, then it must ensure that the dealer or broker is performing the bank’s CIP.
Published
2025/04/17
